Mulvaney issues 30-day halt to new regulations

Monday

Nov 27, 2017 at 8:30 PMNov 27, 2017 at 8:30 PM

By Jim PuzzangheraLos Angeles Times

WASHINGTON (TNS) — Despite a lawsuit challenging his legitimacy as acting director of the Consumer Financial Protection Bureau, Mick Mulvaney moved swiftly Monday to order a 30-day halt of new regulations issued by the federal watchdog agency.

President Donald Trump appointed Mulvaney just hours after CFPB Director Richard Cordray stepped down and told staffers that Deputy Director Leandra English would automatically become the acting chief, as specified by the act creating the agency.

In a Washington news conference held just minutes before a court hearing that could decide whether he can remain in his position, Mulvaney said "elections have consequences at every agency, and that includes the CFPB."

"Anything in the pipeline stops for at least 30 days," said Mulvaney, director of the White House Office of Management and Budget.

In addition to ordering a halt on new regulations, the agency is instituting a 30-day hiring freeze.

The news conference followed a morning of high drama when Mulvaney arrived at the agency carrying a large bag from Dunkin' Donuts in hopes of smoothing over potential hard feelings given his stated opposition to the bureau's aggressive regulatory approach. But he first had to walk past consumer advocates stationed outside the bureau's headquarters to protest his appointment.

English greeted her colleagues with an email saying she hoped everyone had a great Thanksgiving break. The bureau veteran filed a lawsuit Sunday seeking to stop Mulvaney from taking over.

In promoting English, his chief of staff and a longtime ally, Cordray told the bureau that she would serve as acting director until Trump nominated a permanent replacement and the Senate confirmed that choice.

Trump tapped Mulvaney for the acting leadership post shortly after.

John Czwartacki, an OMB spokesman, said Mulvaney was given access to the director's office and the staff was cooperative. Czwartacki later posted photos on Twitter of Mulvaney meeting with the bureau's senior staff and of two Dunkin' Donuts boxes with just half a doughnut left.

English filed suit in U.S. District Court for the District of Columbia on Sunday, challenging Trump's appointment of Mulvaney as unlawful. She requested a temporary restraining order to block him from taking the position and declaring her the lawful acting director.

The case was randomly assigned to Judge Timothy J. Kelly, who was nominated by Trump this year and took his seat on the bench in September. A hearing was scheduled for Monday afternoon.

English's short email to bureau staff Monday expressed her gratitude for their service.

"It is an honor to work with all of you," English wrote, signing the email as "acting director."

She later went to Capitol Hill, where she was scheduled to meet with Senate Minority Leader Charles E. Schumer of New York and Sen. Elizabeth Warren, D-Mass. Warren came up with the idea for the agency then helped launch it before being elected to the Senate.

Mulvaney reportedly also sent an email to the bureau's staff, telling them to "please disregard any instructions you receive from Ms. English in her presumed capacity as acting director" and encouraging them to stop by the director's office on the fourth floor "to say hello and grab a donut."

The White House said Sunday night that the president had the authority to appoint Mulvaney to serve as acting director until a permanent choice is nominated and confirmed by the Senate. White House press secretary Sarah Huckabee Sanders noted the Justice Department's Office of Legal Counsel agreed with the administration's interpretation of the law as did the bureau's general counsel, Mary McLeod.

McLeod sent a memo to the bureau's senior leadership team Saturday that it was her opinion that Trump has the authority to appoint an acting director, and she advised agency personnel "to act consistently with the understanding that Director Mulvaney is the acting director of the CFPB."

But that position is disputed by English and other supporters of the bureau in the high-stakes battle over leadership of the financial watchdog agency that started when Corday submitted his formal resignation Friday.

The Dodd-Frank Act, which created the agency in 2010, specifically states that the deputy director shall "serve as acting director in the absence or unavailability of the director."

But just hours after Cordray's move, Trump named his own acting director under the Federal Vacancies Reform Act of 1998.

Trump's appointment of Mulvaney under the vacancy law allowed the president to designate someone who already has been confirmed by the Senate to perform acting duties.

Mulvaney would remain as OMB director while also overseeing the consumer bureau until a permanent director is confirmed and sworn in.

Senior Trump administration officials said the 1998 law superseded the Dodd-Frank provision.

Former Rep. Barney Frank, D-Mass., the co-author of the law that bears his name, said Monday that the intention was for the deputy director to become the bureau's acting chief.

"We knew this is a very tough job this agency has politically. To do its job, we wanted to give it as much insulation as possible" from the political process, Frank said. If the intention had been for the Vacancies Act to dictate the process, lawmakers wouldn't have included the provision in Dodd-Frank, he said.

But Frank acknowledged the language in the provision could have been clearer to indicate it covered a resignation. But he said the term "absence" should cover a resignation.

Rep. Jamie Raskin, D-Md., a constitutional law professor at American University's Washington College of Law, joined protesters outside the CFPB on Monday. He said that English is the rightful acting director under Dodd-Frank and that Trump is trying to "destroy the independence of the bureau."

Mulvaney has been an outspoken opponent of the bureau, having said in a 2014 interview that it was a "joke ... in a sad, sick kind of way" and that he "would like to get rid of it." He and many Republicans, including Trump, have said the bureau has restricted consumer access to credit by being overly aggressive in pursuing financial institutions and establishing new regulations.

The bureau has provided consumers about $12 billion in refunds, mortgage principal reductions and other relief from financial institutions since opening in 2011. The bureau also played a key role in penalizing Wells Fargo & Co. for its creation of unauthorized accounts.

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